Starting a Business
Ready to start your business? Read through our top ten frequently asked questions with tips to help you get your business off the ground in Colorado!
1. Where should I start when opening a business in Colorado?
First, connect with your local SBDC to schedule no-cost confidential consulting appointment. Your consultant will spend time getting to understand your business or new venture and will provide personalized feedback and recommendations as appropriate. Your SBDC office is a great resource for referrals to various government sources of assistance, local resources, and economic development assistance. Second, consult the Colorado Business Resource Book, a basic guide to starting a business in Colorado. The guide is written to aid business with basic information for establishing and running a business in the state of Colorado. If you still have questions, contact the Small Business Navigator at 720-665-7439. SMALL BUSINESS COVID-19 DISASTER RESPONSE HOTLINE: 303-860-5881 ((OPEN MONDAY-FRIDAY 8AM-5PM))
2. How do I get a state business license?
The State of Colorado does not issue or require a generic general business license. Licenses are issued by various state agencies for specific types of business, activities and professions. Contact your local town, city, or county office for business license information. Before filing any paperwork, confirm your business entity, name availability, and all filing steps. Your SBDC consultant can help you identify these steps.
3. How do I register my business name or set up a legal structure?
Before registering your business, review the Legal Structure chapter of the Colorado Business Resource Book and consider meeting with a local attorney and CPA.
Next step, verify if your preferred business name is already being used in Colorado by checking the Secretary of State website. If the preferred business name is available, you’ll register the name and entity type of the business. Make sure to double check the registration paperwork is the right before proceeding.
If you are operating as sole proprietor or general partnership you may need to register a trade name with the Secretary of State (303-894-2200). Trade name registration with the Secretary of State does NOT establish exclusive rights. However, it is required when doing business under any name other than the first and last names of the owner(s)/organizer(s).
Register Your Business on MyBiz
MyBizColorado is the fastest way to register and manage a business. This is the official filing tool for the State of Colorado. You can start right now, or take a few moments to learn more on the website.
With MyBizColorado, you can:
- Register for a sales tax license
- Register employees for wage withholding
- Register employees for unemployment insurance
- Find resources to help plan a new business and obtain professional licenses
The new platform participating agencies and partners include the Department of Labor Employment, Department of Revenue, Department of Regulatory Agencies, Governor’s Office of Economic Development and International Trade, Governor’s Office of Information Technology, Secretary of State’s Office, the Statewide Internet Portal Authority, and Colorado Interactive.
For questions regarding MyBiz Colorado registration process, watch this video.
4. How do I get a tax identification number?
All legal structures, except sole proprietors with no employees, must obtain for a Federal Employer Identification Number (FEIN) with the IRS. Sole Proprietors with no employees will file under the owners social security number unless applying for an EIN.
Business owners may also need to file for a state sales tax license. To apply with the state, complete the online form CR 0100.
5. What is the sales tax rate in Colorado?
The state sales tax rate in Colorado is 2.9%. However, sales tax is also collected for counties, cities and special districts. The exact sales tax rate is determined by adding the various rates that apply at the location where a sales transaction is completed. The state collects the majority of all sales taxes. However, there are 71 “home rule” cities that require separate licensing and directly collect their city’s portion of the sales tax on all sales made within their jurisdiction. For more information, click here. The Department of Revenue publishes the Colorado Sales/Use Tax Rates, DRP 1002, which lists the tax rates for all jurisdictions in Colorado. Stay current with tax changes at https://www.colorado.gov/tax and the Colorado Sales Tax chapter of the Colorado Business Resource Book.
6. Where do I obtain workers' compensation insurance in Colorado?
Workers’ compensation insurance is purchased through private insurance companies in Colorado. There is not a state fund. The Colorado Legislature created Pinnacol Assurance (303-361-4000), a non-profit insurance carrier, to sell workers’ comp. It is not, however, a state agency. Many new businesses frequently obtain their workers’ comp through Pinnacol; however, it not required that new business use Pinnacol. Businesses are encouraged to shop for the best rates and service as they would for any other form of insurance. Consult directories and speak with other business owners for references. For information regarding employer responsibilities to provide workers’ compensation insurance coverage, contact the Division of Workers’ Compensation (303-318-8700) or refer to the Employer Responsibilities chapter of the Colorado Business Resource Book.
7. How much is the unemployment insurance tax in Colorado?
For the majority of employers, the beginning base tax rate is 0.017 plus principle bond rate of 0.0038 for the combined rate of 0.0208 on the first $11,700 of each employee’s annual earnings. Those employers in construction-related businesses may be subject to a different tax base. For more information regarding unemployment insurance, contact the Division of Unemployment Insurance (303-318-9100) or refer to the Employer Responsibilities chapter of the Colorado Business Resource Book.
8. Where do I get a government grant to start a new business?
Unfortunately, there are not general start-up government grants – state or federal – available for opening a business. Contact your SBDC consultant and local economic development groups for possible local grants of funding resources.
There are various grants available for industry specific businesses, such as, in Creatives Industry, the Tourism Industry, and OEDIT’s Advanced Industries. Additional grants that advance industries might be eligible for are called Small Business Innovative Research (SBIR) grants. SBIR grants are usually issued by a federal agency that is seeking research and development in specific areas including military weapons development, biotechnology and other high-tech fields. SBIR Colorado (303-427-1312 ext 201) and Colorado SBDC TechSource both assist entrepreneurs, scientists and researchers identify SBIR grant opportunities.
9. Where do I apply for a government loan?
The vast majority of government loan programs – state and federal – are called guaranteed loans. To apply for these loans, a business owner contacts a bank or other financial institution which applies to the government for a guarantee on the loan. There are also other forms of private financing for business owners. The Financing Chapter of the Colorado Business Resource Book outlines many of these options. Before speaking to a financial institution, sign up for no-cost confidential consulting. Your SBDC consultant can help you prepare for the funding process.
Two important factors for business owners to keep in mind:
- It is very difficult to finance new businesses. The majority of financial resources for a new business will come from the personal assets of the owner and their family or friends. Lending institutions prefer to see a two to three years of business financial history (balance sheet, income statement, and cashflow statement) before making a loan.
- A complete and well written business plan is critical to any type of financing. SBDC centers provide no-cost confidential consulting to assist business owners in the writing a business plan. The Business Plan Chapter of the Colorado Business Resource Book provides a basic outline for writing a business plan.
10. Do I need business insurance or other licenses?
Yes. Business owners should acquire insurance for their business based on the industry and the services provided. Research different types of insurance companies to find the best coverage for your business.
You may need to obtain additional licences beyond a sales tax license (ie. event license or liquor license) that are dependent on the type of business, product, or service. Checkout the Occupational License Data and contact local and government office as needed.
Small Business Navigator
The Small Business Navigator is the first point of contact for new and existing business owners with questions about federal, state and local licensing requirements. The navigator also provides referrals to a variety of state and federal assistance programs and local small business training. In addition, the navigator maintains a comprehensive database of federal, state and local regulatory and permitting requirements.
Call the Small Business Navigator at 303-592-5920 with your start-up questions!